Directive (EU) 2023/959 of the European Parliament and of the Council of 10 May 2023 amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union and Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading system (Text with EEA relevance)

;

• (3) Article 3 is replaced by the following: ‘Article 3 Review The Commission shall monitor the functioning of the reserve in the context of the report provided for in Article 10(5) of Directive 2003/87/EC. That report should consider relevant effects on competitiveness, in particular in the industrial sector, including in relation to GDP, employment and investment indicators. Within three years of the start of the operation of the reserve and at five-year intervals thereafter, the Commission shall, on the basis of an analysis of the orderly functioning of the European carbon market, review the reserve and submit a legislative proposal, where appropriate, to the European Parliament and to the Council. Each review shall pay particular attention to the percentage figure for the determination of the number of allowances to be placed in the reserve pursuant to Article 1(5) of this Decision, the numerical value of the threshold for the total number of allowances in circulation, including with a view to a potential adjustment of that threshold in line with the linear factor referred to in Article 9 of Directive 2003/87/EC, as well as the number of allowances to be released from the reserve pursuant to Article 1(6) or (7) of this Decision. In its review, the Commission shall also look into the impact of the reserve on growth, jobs, and the Union’s industrial competitiveness and on the risk of carbon leakage.’.

Article 3

Transposition

However, Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with the following articles by 30 June 2024:

• (a) Article 1, point (3)(d), of this Directive regarding Article 3, points (ae) to (ai), of Directive 2003/87/EC as added by that point;

• (b) Article 1, point (29), of this Directive with the exception of Article 30f(4) of Directive 2003/87/EC as inserted by that point; and

• (c) Article 1, point (31), of this Directive regarding Annexes III and IIIa to Directive 2003/87/EC as inserted by that point.

They shall immediately inform the Commission of the measures adopted in accordance with the first and second subparagraphs.

When Member States adopt those measures, they shall contain a reference to this Directive or shall be accompanied by such reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States.

Article 4

Transitional provisions

When complying with their obligation set out in Article 3(1) of this Directive, Member States shall ensure that their national legislation transposing Article 3, point (u), Article 10a(3) and (4), Article 10c(7) and Annex I, points 1 and 3, of Directive 2003/87/EC, in its version applicable on 4 June 2023, continue to apply until 31 December 2025. By way of derogation from Article 3(1), first subparagraph, last sentence, they shall apply their national measures transposing amendments to those provisions from 1 January 2026.

Article 5

Entry into force and application

This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Article 2 shall apply from 1 January 2024.

Article 6

Addressees

This Directive is addressed to the Member States.

ANNEX

• (1) Annex I to Directive 2003/87/EC is amended as follows:
• (a) point 1 is replaced by the following:
• ‘1. Installations or parts of installations used for research, development and testing of new products and processes are not covered by this Directive. Installations where during the preceding relevant five-year period referred to in Article 11(1), second subparagraph, emissions from the combustion of biomass that complies with the criteria set out pursuant to Article 14 contribute on average to more than 95 % of the total average greenhouse gas emissions are not covered by this Directive.’;
• (b) point 3 is replaced by the following:
• ‘3. When the total rated thermal input of an installation is calculated in order to decide upon its inclusion in the EU ETS, the rated thermal inputs of all technical units which are part of it, in which fuels are combusted within the installation, shall be added together. Those units may include all types of boilers, burners, turbines, heaters, furnaces, incinerators, calciners, kilns, ovens, dryers, engines, fuel cells, chemical looping combustion units, flares, and thermal or catalytic post-combustion units. Units with a rated thermal input under 3 MW shall not be taken into account for the purposes of this calculation.’;
• (c) the table is amended as follows:
• (i) the first row is replaced by the following: ‘Combustion of fuels in installations with a total rated thermal input exceeding 20 MW (except in installations for the incineration of hazardous or municipal waste) From 1 January 2024, combustion of fuels in installations for the incineration of municipal waste with a total rated thermal input exceeding 20 MW, for the purposes of Articles 14 and 15. Carbon dioxide’
• (ii) the second row is replaced by the following: ‘Refining of oil, where combustion units with a total rated thermal input exceeding 20 MW are operated Carbon dioxide’
• (iii) the fifth row is replaced by the following: ‘Production of iron or steel (primary or secondary fusion) including continuous casting, with a capacity exceeding 2,5 tonnes per hour Carbon dioxide’
• (iv) the seventh row is replaced by the following: ‘Production of primary aluminium or alumina Carbon dioxide and perfluorocarbons’
• (v) the fifteenth row is replaced by the following: ‘Drying or calcination of gypsum or production of plaster boards and other gypsum products, with a production capacity of calcined gypsum or dried secondary gypsum exceeding a total of 20 tonnes per day Carbon dioxide’
• (vi) the eighteenth row is replaced by the following: ‘Production of carbon black involving the carbonisation of organic substances such as oils, tars, cracker and distillation residues with a production capacity exceeding 50 tonnes per day Carbon dioxide’
• (vii) the twenty-fourth row is replaced by the following: ‘Production of hydrogen (H2) and synthesis gas with a production capacity exceeding 5 tonnes per day Carbon dioxide’
• (viii) the twenty-seventh row is replaced by the following: ‘Transport of greenhouse gases for geological storage in a storage site permitted under Directive 2009/31/EC, with the exclusion of those emissions covered by another activity under this Directive Carbon dioxide’
• (ix) the following row is added after the last new row, with a separation line in between: ‘Maritime transport Maritime transport activities covered by Regulation (EU) 2015/757 with the exception of the maritime transport activities covered by Article 2(1a) and, until 31 December 2026, Article 2(1b) of that Regulation Carbon dioxide From 1 January 2026, methane and nitrous oxide’

• (2) Annex IIb to Directive 2003/87/EC is replaced by the following: ‘ANNEX IIb

PART A

DISTRIBUTION OF FUNDS FROM THE MODERNISATION FUND CORRESPONDING TO ARTICLE 10(1), THIRD SUBPARAGRAPH Share Bulgaria 5,84  % Czechia 15,59  % Estonia 2,78  % Croatia 3,14  % Latvia 1,44  % Lithuania 2,57  % Hungary 7,12  % Poland 43,41  % Romania 11,98  % Slovakia 6,13  %

PART B

DISTRIBUTION OF FUNDS FROM THE MODERNISATION FUND CORRESPONDING TO ARTICLE 10(1), FOURTH SUBPARAGRAPH Share Bulgaria 4,9  % Czechia 12,6  % Estonia 2,1  % Greece 10,1  % Croatia 2,3  % Latvia 1,0  % Lithuania 1,9  % Hungary 5,8  % Poland 34,2  % Portugal 8,6  % Romania 9,7  % Slovakia 4,8  % Slovenia 2,0  %’;

• (3) The following Annexes are inserted as Annexes III and IIIa to Directive 2003/87/EC: ‘ANNEX III ACTIVITY COVERED BY CHAPTER IVa Activity Greenhouse gases Release for consumption of fuels which are used for combustion in the buildings, road transport and additional sectors. This activity shall not include: (a) the release for consumption of fuels used in the activities listed in Annex I, except if used for combustion in the activities of transport of greenhouse gases for geological storage as set out in the table, row twenty seven, of that Annex or if used for combustion in installations excluded under Article 27a; (b) the release for consumption of fuels for which the emission factor is zero; (c) the release for consumption of hazardous or municipal waste used as fuel. The buildings and road transport sectors shall correspond to the following sources of emissions, defined in the 2006 IPCC Guidelines for National Greenhouse Gas Inventories, with the necessary modifications to those definitions as follows: (a) Combined Heat and Power Generation (CHP) (source category code 1A1a ii) and Heat Plants (source category code 1A1a iii), insofar as they produce heat for categories under points (c) and (d) of this paragraph, either directly or through district heating networks; Carbon dioxide (b) Road Transportation (source category code 1A3b), excluding the use of agricultural vehicles on paved roads; (c) Commercial / Institutional (source category code 1A4a); (d) Residential (source category code 1A4b). Additional sectors shall correspond to the following sources of emissions, defined in the 2006 IPCC Guidelines for National Greenhouse Gas Inventories: (a) Energy Industries (source category code 1A1), excluding the categories defined under the second paragraph, point (a), of this Annex; (b) Manufacturing Industries and Construction (source category code 1A2). ANNEX IIIa ADJUSTMENT OF LINEAR REDUCTION FACTOR IN ACCORDANCE WITH ARTICLE 30c(2) 1.If the average emissions reported under Chapter IVa for the years 2024 to 2026 are more than 2 % higher compared to the value of the 2025 quantity defined in accordance with Article 30c(1), and if those differences are not due to the difference of less than 5 % between the emissions reported under Chapter IVa and the inventory data of 2025 Union greenhouse gas emissions from UNFCCC source categories for the sectors covered under Chapter IVa, the linear reduction factor shall be calculated by adjusting the linear reduction factor referred to in Article 30c(1). 2.The adjusted linear reduction factor in accordance with point 1 shall be determined as follows: LRFadj = 100% [MRV[2024-2026] – (ESR[2024] - 6 LRF[2024] ESR[2024])]/ (5 MRV[2024-2026]), where, LRFadj is the adjusted linear reduction factor; MRV[2024-2026] is the average of verified emissions under Chapter IVa for the years 2024 to 2026; ESR[2024] is the value of 2024 emissions defined in accordance with Article 30c(1) for the sectors covered under Chapter IVa; LRF[2024] is the linear reduction factor referred to in Article 30c(1).’;

• (4) Annex IV to Directive 2003/87/EC is amended as follows:
• (a) in Part A, the section ‘Calculation’ is amended as follows:
• (i) in the third paragraph, the last sentence ‘The emission factor for biomass shall be zero.’ is replaced by the following: ‘The emission factor for biomass that complies with the sustainability criteria and greenhouse gas emission-saving criteria for the use of biomass established by Directive (EU) 2018/2001, with any necessary adjustments for application under this Directive, as set out in the implementing acts referred to in Article 14 of this Directive, shall be zero.’;
• (ii) the fifth paragraph is replaced by the following: ‘Default oxidation factors developed pursuant to Directive 2010/75/EU shall be used, unless the operator can demonstrate that activity-specific factors are more accurate.’;
• (b) in Part B, section ‘Monitoring of carbon dioxide emissions’, fourth paragraph, the last sentence ‘The emission factor for biomass shall be zero.’ is replaced by the following: ‘The emission factor for biomass that complies with the sustainability criteria and greenhouse gas emission-saving criteria for the use of biomass established by Directive (EU) 2018/2001, with any necessary adjustments for application under this Directive, as set out in the implementing acts referred to in Article 14 of this Directive, shall be zero.’;
• (c) the following part is added: ‘PART C Monitoring and reporting of emissions corresponding to the activity referred to in Annex III Monitoring of emissions Emissions shall be monitored by calculation. Calculation Emissions shall be calculated using the following formula: Fuel released for consumption × emission factor Fuel released for consumption shall include the quantity of fuel released for consumption by the regulated entity. Default IPCC emission factors, taken from the 2006 IPCC Inventory Guidelines or subsequent updates of those Guidelines, shall be used unless fuel-specific emission factors identified by independent accredited laboratories using accepted analytical methods are more accurate. A separate calculation shall be made for each regulated entity, and for each fuel. Reporting of emissions Each regulated entity shall include the following information in its report:
• A. Data identifying the regulated entity, including:
• — name of the regulated entity;
• — its address, including postcode and country;
• — type of the fuels it releases for consumption and its activities through which it releases the fuels for consumption, including the technology used;
• — address, telephone, fax and email details for a contact person; and
• — name of the owner of the regulated entity, and of any parent company.
• B. For each type of fuel released for consumption and which is used for combustion in the sectors referred to in Annex III, for which emissions are calculated:
• — quantity of fuel released for consumption;
• — emission factors;
• — total emissions;
• — end use(s) of the fuel released for consumption; and
• — uncertainty. Member States shall take measures to coordinate reporting requirements with any existing reporting requirements in order to minimise the reporting burden on businesses.’;

• (5) In Annex V to Directive 2003/87/EC, the following part is added: ‘PART C Verification of emissions corresponding to the activity referred to in Annex III General Principles 1.Emissions corresponding to the activity referred to in Annex III shall be subject to verification. 2.The verification process shall include consideration of the report pursuant to Article 14(3) and of monitoring during the preceding year. It shall address the reliability, credibility and accuracy of monitoring systems and the reported data and information relating to emissions, and in particular:
• (a) the reported fuels released for consumption and related calculations;
• (b) the choice and the employment of emission factors;
• (c) the calculations leading to the determination of the overall emissions. 3.Reported emissions may only be validated if reliable and credible data and information allow the emissions to be determined with a high degree of certainty. A high degree of certainty requires the regulated entity to show that:
• (a) the reported data are free of inconsistencies;
• (b) the collection of the data has been carried out in accordance with the applicable scientific standards; and
• (c) the relevant records of the regulated entity are complete and consistent. 4.The verifier shall be given access to all sites and information in relation to the subject of the verification. 5.The verifier shall take into account whether the regulated entity is registered under the Union eco-management and audit scheme (EMAS). Methodology Strategic analysis 6.The verification shall be based on a strategic analysis of all the quantities of fuels released for consumption by the regulated entity. This requires the verifier to have an overview of all the activities through which the regulated entity is releasing the fuels for consumption and their significance for emissions. Process analysis 7.The verification of the data and information submitted shall, where appropriate, be carried out on the site of the regulated entity. The verifier shall use spot-checks to determine the reliability of the reported data and information. Risk analysis 8.The verifier shall submit all the means through which the fuels are released for consumption by the regulated entity to an evaluation with regard to the reliability of the data on the overall emissions of the regulated entity. 9.On the basis of this analysis the verifier shall explicitly identify any element with a high risk of error and other aspects of the monitoring and reporting procedure which are likely to contribute to errors in the determination of the overall emissions. This especially involves the calculations necessary to determine the level of the emissions from individual sources. Particular attention shall be given to those elements with a high risk of error and the abovementioned aspects of the monitoring procedure. 10.The verifier shall take into consideration any effective risk control methods applied by the regulated entity with a view to minimising the degree of uncertainty. Report 11.The verifier shall prepare a report on the validation process stating whether the report pursuant to Article 14(3) is satisfactory. This report shall specify all issues relevant to the work carried out. A statement that the report pursuant to Article 14(3) is satisfactory may be made if, in the opinion of the verifier, the total emissions are not materially misstated. Minimum competency requirement for the verifier 12.The verifier shall be independent of the regulated entity, carry out his or her activities in a sound and objective professional manner, and understand:
• (a) the provisions of this Directive, as well as relevant standards and guidance adopted by the Commission pursuant to Article 14(1);
• (b) the legislative, regulatory, and administrative requirements relevant to the activities being verified; and
• (c) the generation of all information related to all the means through which the fuels are released for consumption by the regulated entity, in particular, relating to the collection, measurement, calculation and reporting of data.’.

[^E0001]: Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) (OJ L 243, 9.7.2021, p. 1).

[^E0002]: OJ L 282, 19.10.2016, p. 4.’;

[^E0003]: Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).’;

[^E0004]: Regulation (EC) No 336/2006 of the European Parliament and of the Council of 15 February 2006 on the implementation of the International Safety Management Code within the Community and repealing Council Regulation (EC) No 3051/95 (OJ L 64, 4.3.2006, p. 1).

[^E0005]: Regulation (EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and amending Directive 2009/16/EC (OJ L 123, 19.5.2015, p. 55).

[^E0006]: Council Directive (EU) 2020/262 of 19 December 2019 laying down the general arrangements for excise duty (OJ L 58, 27.2.2020, p. 4).

[^E0007]: Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (OJ L 283, 31.10.2003, p. 51).’;

[^E0008]: Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of buildings (OJ L 153, 18.6.2010, p. 13).’;

[^E0009]: Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, p. 1).’;

[^E0010]: Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (OJ L 130, 16.5.2023, p. 52).’;

[^E0011]: Regulation (EU) 2021/1056 of the European Parliament and of the Council of 24 June 2021 establishing the Just Transition Fund (OJ L 231, 30.6.2021, p. 1).’;

[^E0012]: Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

[^E0013]: Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 12.6.2014, p. 1).’;

[^E0014]: Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC (OJ L 315, 14.11.2012, p. 1).’;

[^E0015]: Commission Decision 2010/670/EU of 3 November 2010 laying down criteria and measures for the financing of commercial demonstration projects that aim at the environmentally safe capture and geological storage of CO2 as well as demonstration projects of innovative renewable energy technologies under the scheme for greenhouse gas emission allowance trading within the Community established by Directive 2003/87/EC of the European Parliament and of the Council (OJ L 290, 6.11.2010, p. 39).

[^E0016]: Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).’;

[^E0017]: Regulation (EU) 2023/955 of the European Parliament and of the Council of 10 May 2023 establishing a Social Climate Fund and amending Regulation (EU) 2021/1060 (OJ L 130, 16.5.2023, p. 1).’;

[^E0018]: Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).’;

[^E0019]: Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives (OJ L 312, 22.11.2008, p. 3).’;

[^E0020]: Regulation (EU) 2018/842 of the European Parliament and of the Council of 30 May 2018 on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement and amending Regulation (EU) No 525/2013 (OJ L 156, 19.6.2018, p. 26).

[^E0021]: Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom (OJ L 424, 15.12.2020, p. 1).’;

[^E0022]: Regulation (EC) No 401/2009 of the European Parliament and of the Council of 23 April 2009 on the European Environment Agency and the European Environment Information and Observation Network (OJ L 126, 21.5.2009, p. 13).’;